More on Austrian Capital Theory

The Mises Institute kindly invited me to give this year’s Hayek Memorial Lecture at their Austrian Scholars Conference on March 8. I chose Austrian Capital Theory as my subject, arguing that it is productive to consider it as a theory of production and not just as part of the theory of distribution and interest. The lecture has now appeared in print. Here it is on YouTube (complete with thick Euro-accent and all). And here is a characteristically fine recent paper by Peter Lewin that makes the point (which nicely converges with my Hayek Lecture) that capital theory was absolutely key to the evolution of Hayek and Lachmann’s thought. Peter cites Lachmann’s extremely acute critique of Keynes (which Peter Klein and I would have cited had we known it in this paper):

The modern theory of investment, set forth by Lord Keynes in The General Theory, has had its many triumphs these last twelve years, but it still has a number of gaps. Conceiving of investment as simple growth of a stock of homogeneous capital, it is ill-equipped to cope with situations in which the immobility of heterogeneous capital resources imposes a strain of the economic system. In particular, it can tell us little about the ‘inducement to invest’ in a world where scarcity of some capital resources co-exists with abundance of others. (Lachmann 1948: 131

You may be aware of this already, but Fisher Black’s unique approach to macroeconomics was also based firmly on the notion of heterogeneous capital. He argued that the heterogeneity involved occurred at a level finer than any captured in official statistical categories.